InvestorQ : What is free float and what is the latest SEBI proposals on free float definition shift?
vidhya Laxmi made post

What is free float and what is the latest SEBI proposals on free float definition shift?

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sarah Leo answered.
4 months ago
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Here is why SEBI is doing a re-think on free float definition.

· From the point of view of regulation and passive investing, the concept of free float has taken centre-stage now.

· Free float equity of a listed company represents that portion of equity that is available for trading in the markets.

· In India, free float is defined as non-promoter holdings So, free float includes that portion of equity capital held by retail and institutional investors.

· Free float ideas draw a line between investor holdings and strategic promoter holdings from a long term business commitment point of view.

· The debate has come to the forefront after Adani group lost Rs.1 trillion from its market cap last year and it emerged that many institutional investors had just stayed invested.

· Such equity was technically free float, but as good as locked and unlikely to be available for trading in the near future also. LIC holdings are in a similar category.

· The question for SEBI is whether long term institutional holdings in companies should be classified as free float or not?

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